The Making of a CEO of the Year

The technical complexity of PMC-Sierra’s press announcements resonated well with engineering audiences but press coverage outside of core technical publications poorly reflected PMC-Sierra’s value propositions and position as a company.

The market for high-speed broadband communication services exploded in 2000 creating unprecedented growth opportunities for participants in the $20 billion Internet traffic business. Sophisticated users have demanded that equipment makers such as Cisco, Nortel and Juniper provider faster and better products to help them increase the volume of data traffic they process. In turn, these equipment makers have turned to semiconductor manufacturers to outsource critical silicon building blocks in order to get to market faster and be able to focus on providing ever-increasing functionality. PMC-Sierra (Nasdaq: PMCS) competes with household-name companies, such as Broadcom, Texas Instruments and Intel, to provide these critical silicon building blocks for the routers and switches that power the Internet.

Although PMC-Sierra was respected and well-known in financial circles, this exposure did not translate to the business and trade media. The technical complexity of PMC-Sierra’s press announcements resonated well with engineering audiences but press coverage outside of core technical publications poorly reflected PMC-Sierra’s value propositions and position as a company. Matters were further complicated by PMC-Sierra’s rapid-fire acquisition of seven companies – a move that created the perception that PMC-Sierra was unfocused and spread too thin. The situation required an aggressive public relations program to communicate PMC-Sierra’s corporate strategy for domination in the broadband semiconductor market. Articulating this message required the creation of a credible public voice that stitched together the various elements of the business into a cohesive and compelling vision.

In April 2000, PMC-Sierra turned to Benjamin Group/BSMG Worldwide (BG/BSMG) to create a comprehensive public relations program that would communicate the company’s shift from a hodge-podge semiconductor provider to a complete network architecture enabler. The campaign relied on branding previously media-shy, Chairman and CEO Robert L. Bailey, as the corporate voice. During a six-month campaign, BG/BSMG secured myriad high-profile, business coverage for PMC-Sierra, reporting more than 77 million print impressions and more than 100 million online impressions. The culmination of the program was a cover story feature in Electronic Business, the premier publication for high-tech business coverage, which named Bailey, CEO of the Year.

SPEAK SOFTLY AND CARRY A BIG STICK

Before initiating the program, the agency performed qualitative and quantitative analysis of media coverage compiled by Delahaye/Medialink. Several challenging statistics were identified:

Broadcom CEO, Dr. Henry Nicholas III, was quoted almost twice as frequently in business and trade articles. Bailey ranked a distant third.

PMC-Sierra was perceived as the leader in legacy semiconductors and was not considered a major player in high-speed networking.

PMC-Sierra ranked third behind Broadcom and Lucent Microelectronics in terms of product and corporate coverage.

“PMC is very strong in offering chips for mainstream applications like OC-48, but in terms of OC-192, I haven’t seen any announcements from them.” - Kim Funasaki, IDC, Electronic Buyers’ News, May 15, 2000

BG/BSMG determined that the key to winning mindshare with the editor and analyst community was three-fold.

Position Bailey as the modest, soft-spoken antithesis to Broadcom’s temperamental and egomaniacal CEO, Henry Nicholas.

Secure business and trade press coverage crediting PMC-Sierra’s financial strength to its ability to deliver a broad line of products – from legacy to cutting-edge.

Attack Broadcom’s corporate culture by positioning PMC-Sierra as a balanced workplace who’s success in innovation is due to management’s encouragement of diversity of thought.

GET WITH THE PROGRAM

BG/BSMG worked closely with PMC-Sierra’s internal public relations team to create a multi-faceted message platform catering to a business-level audience without sacrificing the communication efforts to the engineering constituents. The overarching communication goal was to show why PMC-Sierra was essential to building network equipment faster and to show why Bailey was the leading executive in the broadband semiconductor industry. The following outlines specific tactical elements of the program:

Keep it Simple!

PMC-Sierra was known in the media and analyst community for its verbose and difficult-to-interpret press releases. The agency elevated messaging in each release to highlight end-user benefits and technology applications. Deep technical information was removed from releases, and instead included in accompanying technical overviews. Month-over-month coverage increased, totaling a jump of almost 65 percent within the 12-month period, with editors commenting during interviews that news releases were now clear and concise.

INCREASING EXECUTIVE VISIBILITY

BG/BSMG targeted keynote address opportunities at executive-level forums and trade organization luncheons. The agency secured a keynote address for a PMC-Sierra at the Fabless Semiconductor Association Quarterly Luncheon - the semiconductor industry’s most influential panel. Media invitations were extended to top-tier influencers who were offered exclusive opportunities to meet with executives. Material from the address sparked interest from business press leading to promising follow-up interviews.

LEVERAGING ACQUISITIONS TO SPARK MEDIA INTEREST

Acquisitions are inherently interesting to the media. Typically coverage centers on the economics of a deal. For the trade press and most of the electronics business press, this angle is typically not worth much more than a mention. Challenging this paradigm, the agency offered trade press and business technology press non-traditional access to CEO Bailey. Seven times through the year, Bailey (or a member of his executive staff) went beyond the economics, focusing the discussions with press on future vision. The results were spectacular and can be summed up by the following quote:

Throughout 2000, the communication program’s brass ring was winning Electronic Business’ prestigious award. Grabbing the ring required gaining the attention of editor-in-chief, Kathleen Doler. PMC-Sierra had a fabulous reputation with Wall Street, so the agency relied on stellar financials to hook Doler, who was formerly a reporter for Investor’s Business Daily and understood very well the power of financial performance. Using acquisition announcements as continuing news hooks, several meetings with Doler were used to highlight 80 percent gross margins, rapid growth and management’s ability to quickly integrate acquired companies. Bailey and his executives spoke out in Electronic Business several times in various articles on topics ranging from acquisition strategy to working with customers in the new product development process.

Doler was won over, and sent a senior editor to interview Bailey in Burnaby, British Columbia for the CEO of the year feature. The interview took place over three days and included input from all levels of senior management, an on-site interview at Bailey’s home and a day of shadowing Bailey in customer and company meetings. The result was a cover story in Electronic Business that placed Bailey in the rarified company of past winners, who include powerhouse leaders such as John Chambers of Cisco and Koichi Nishimura of Solectron.

IF YOU BUILD IT THEY WILL COME

In December 2000, after successfully placing Bailey as Electronic Business’ CEO of the Year, BG/BSMG worked with the Churchill Club of Silicon Valley, the premier public affairs forum in the San Francisco Bay Area, to create and organize a public panel on broadband communications. Scheduled for February 21, 2001 the high-profile CEO panel included Bailey, Henry Nicholas, Scott Kriens (Juniper Networks) and Don Scifres (JDS Uniphase). The panel is considered the most prestigious gathering of communications experts in Silicon Valley history. Attendance is expected to top 1,000 venture capitalists, corporate executives and media.

RESULTS ARE IN…

Messaging Success

The following quotes indicate how well messaging was received in 2000:

“Companies with glittering prospects are common enough in high tech. But seldom is there such wide agreement that a company this size has what it takes to vault into the big leagues. It’s difficult, in fact to extract anything but rave compliments from those familiar with PMC-Sierra and its management.” - Russ Arensman, Electronic Business, Dec. 2000

“In 1997, PMC-Sierra exited the PMC-related chip business in favor of the network. The top job went to Bob Bailey…Bob Bailey has turned PMC-Sierra into one of the fastest-growing semiconductor companies. Its sales have jumped 107 percent, from $127 million in 1997 to $263 million in 1999….PMC’s stock is up 2,531 percent, from $6.50 a share in July 1997 to $171 in mid-October.” - Om Malik, Red Herring, Dec. 4, 2000

“This company has done a tremendous job. They’ve launched a massive effort [through] an acquisition spree and in the process picked up some really good pieces of real estate. They’ve cleverly identified the right segments and are now in the leadership position.” - Arun Veerappan (BancBoston Robertson Stephens), CMP TechWeb July 17, 2000

“I use a pencil, not a pen, when I put together my models for PMC. We don't expect growth to abate anytime soon.”

- Charlie Glavin, CS First Boston, Fortune, May 15, 2000

BUSINESS RESULTS

In August 2000, the peak month for media relations activity, the stock price hit its 52-week high of $255

New product introductions, especially PMC-Sierra’s CHESS architecture, quickly converted into a much higher level of sales and design wins than typical for the company

Overall increase in business for 2000 was 30 percent month-over-month compared to 1999

Record net revenues of $231.7 million and pro forma net income of $0.34 per share (diluted) for the fourth quarter of 2000.

For 2000, PMC-Sierra reported record net revenues of $694.7 million

Total Impressions (Online and Print) Delahaye/Medialink reported 77,672,938 print impressions and 100, 871, 773 online impressions in six months. Market strategy was the number one communicated message.